Is differentiation always important? If you are trying to grow, Sean Ellis and Ethan Garr, say it absolutely is, but it is not just about offering unique features. That’s the topic of this week’s Growth Snack: The Breakout Growth Podcast Short.
Learn why it is crucial to understand what the must-have experience looks like through the eyes of your customers, and why that is important in helping you to differentiate your business even in a crowded market.
You might be surprised as you learn how Sean approached differentiation when he was interim head of growth at Dropbox. Or, you might find some inspiration as Ethan describes a company he is working with now that is launching a new product that will compete against products that solve the same problem for customers. Perhaps this will get you thinking about new questions to ask your customers to better distinguish your offerings.
Either way, we think you will enjoy it! So jump in, and in less than 10 minutes you will have food for thought as you work to achieve breakout growth.
* The hot market trap; why copycats struggle to grow (01:03)
* Differentiation is not just about nifty features or lower pricing (01:51)
* What do customers see as unique? A lesson from Dropbox (03:41)
* Why you should never assume fit transfers across products (05:24)
* Fast-followers and other takeaways (07:21)
00:00.00 Sean Ellis
If you are leading growth building a startup or looking to ladder up your skills then you are probably really busy. So every other week tune into growth snack the breakout growth podcast short where Ethan Garr and I share one key growth learning to help you on your journey to break out growth. Success. It’s food for thought for. Anyone hungry for growth.
00:20.37 Ethan Garr
All right! Sean,so this is an interesting one for you. There’s a company I’m working with that’s about to launch a new product but they already have a legacy product in the same market. This new product solves the same problem but it does it differently more elegantly and I think much more effectively other competitors. Already have products that are in the marketplace with solutions that are similar to this new offering. So my question to you is how important do you think it’ll be for them to differentiate.
00:45.38 Sean Ellis
Well sorry I mean clearly they’re familiar with the market. So that’s a good thing So at the end of the day they need to create enough value in a way that matters so that they can ah they can actually differentiate themselves from.
01:03.21 Sean Ellis
Alternatives So you know to your question of of differentiation I think it’s super important, but it’s not simply differentiating. It’s also differentiating in a way that is important to the customers and it’s It’s a classic trap that I see a lot of companies go into especially startups. They look at a market that seems to be hot. They feel like they can just out execute the competitors. But if they don’t start with why are we uniquely better for for at least a certain group of people better at solving the problem in a unique way. Why are we better? they’re they’re going to have a hard time Actually the the execution is probably not going to matter as much. So I Think that’s the ah the important part of what you just went through there. Do you feel like the product that you’ve mentioned is differentiated enough to reach your growth goals.
01:51.50 Ethan Garr
Potentially yes I mean it is um, it’s differentiated in in some in some unique ways and I think what’s key is it’s not just a lower price. It’s not just um, you know the same. You know the same product with the same exact approach. But. Do think that you know companies often and I think we’ve had to avoid this get hung up on features as differentiators right? If you have a fundamentally a job to be done a problem to solve a lot of your other features are going to be nice to have so it’s not why people came to you. It’s not the value that you’re really talking about. So I think. It’s really important to look at differentiation and understand that it comes in different forms. You know we talked to wizard and Tony Belchtrameli a couple weeks ago and his product. You know he’s got some incredible Ai drivenve features to make prototypes. Yeah, you can literally Handraw something and it’ll turn it into a prototype. That’s cool, but. Fundamentally when he went back and said what drove our breakout growth success. It was actually not just features. It wasn’t about writing more code. It was about thinking about what do customers need and thinking about that uniquely in their market. So um. For us I think it’s going to be about building trust with users and yeah I’m I’m curious when you were back at Dropbox as their interim head of growth years ago. How did you view differentiation then.
03:11.30 Sean Ellis
yeah so yeah I had I had actually gone after that market in in a previous company. So kind of discovered that there was an opportunity there. And um, we we approach it in very much sort of like a business school textbook sort of way like okay what is the category that we’re entering. How is everyone else approaching this category. How are we going to differentiate ourselves we we differentiated ourselves on technology. Which at the end of the day customers. Don’t give a crap about the technology if it doesn’t necessarily help them solve the product in ah or the problem in a better way and so I think what I did differently at Dropbox was you know I came in just as as the team was coming out of private beta so it was just a team of engineers but they did a really good job of getting some.
03:41.35 Ethan Garr
03:59.18 Sean Ellis
Early users on the product and those early users. Love the product and so for me I was just all about you know what? what is it about this product that users really love how is it different in their minds and then and the kind of work from there. So um, really the way you uncover that. Is is the question that we’ve talked about a lot on the program and and one that yeah, a lot of companies talk about these days which is asking those early users. How would you feel if you could no longer use this product if they say they’d be very Disappointed. Usually the reason when I did.
04:34.18 Sean Ellis
More into the answer is that they don’t know a single other product that could solve the problem as effectively as this product where if they say they’d be somewhat disappointed. Usually it’s why would just use product X instead and so there’s some switching cost pain but they know something that can solve the product. Better. So Then then it’s really a question of kind of digging into those who consider it a something. They’d be very disappointed without why would they be very disappointed without it. What is so much uniquely better with this product than than. Product that they maybe previously looked at or previously used. So Obviously that that comes down to you need some early users on the product to be able to answer that Question. So I’ll put it back to you with this example that you’re sharing or this company that you’re working with. Do they have some early users on the product.
05:13.70 Ethan Garr
05:24.18 Ethan Garr
Yeah, but I think it’s a trap I mean yes, we have some Beta users and it’ll be really easy for us to get users from our legacy product onto this product. But I think that’s while that’s great I mean it’s nice to have that kind of kickstart for your for your business. The problem with that of course is that. You can you know you can think that you have um, a fit that you don’t have right? So in this case, we have to do the hard work of asking that question and understanding the fundamental differences or the fundamental similarities that are that users on this product. Um.
06:02.10 Ethan Garr
Fine What it what is it about this product that they that turns it into that must have user experience for them.
06:05.55 Sean Ellis
Yeah, so so so kind of taking taking that back to you like from what you originally said, do you feel like maybe that that just the concept of launch is ah is a flawed concept these days and it’s more like you know it’s back when we first started working together. There was launch parties all over New York City Twenty years ago that they’re like okay we’re done. Let’s release a product on the world and and spend a million dollars on a launch party and we’re off to the races where you know this idea of kind of you mention private beta but it’s like you slowly open the floodgates as you get that validation and so when you say launch where you thinking like. Twenty years ago launch or yeah, are you defining it maybe in a different way. Yeah.
06:44.66 Ethan Garr
Yeah I’m with you I’m like I’m anti-launch. So launch launch is just like the day we’re able to put this product out there. But I think it’s you know anytime you’re going for that sort of launch party with technology you’re opening yourself up for the absolute disaster that will happen.
07:01.70 Sean Ellis
07:03.40 Ethan Garr
When your product breaks on the first day. No matter how good you are. So yeah I think Launch is not the right right? You know way to think about this and I think for our listeners. It’s really important to to to note that because this is really about the starting point of the new learnings and that’s what the differentiation.
07:17.60 Sean Ellis
07:21.70 Ethan Garr
Is all about it’s about understanding what we need to know to actually get to that point where we can go into growth mode because you can’t just assume it.
07:26.82 Sean Ellis
Yeah, yeah, absolutely So I think I think what’s really critical here is that when you’re going into a market. Yeah,, there’s a lot of companies that kind of go into this fast follower mode where it’s ah young and vcs will fund companies where it’s like oh. These guys are on fire. Let’s enter that market with a fast follower I’ll execute everyone. But I think the the really essential part is that you you do need that some level of differentiation unless you’re so early that no one really knows the other competitor yet.
08:02.45 Ethan Garr
08:04.31 Sean Ellis
And so you can you can kind of get in there and grab the market but that implies that there’s not a big technical hurdle to launching into that market or a network effect hurdle and so so really being able to get some early users on a product and then using those feedback cycles to understand.
08:11.49 Ethan Garr
08:22.71 Sean Ellis
Why your product is differentiated. You know uniquely better than than alternatives and then building the channels and and building that flywheel of growth really based on on learning from those initial users before the other guys can launch a product and hopefully by the time they copy you. You’ve already evolved into that market even more and you’re 3 steps ahead of them.
08:42.78 Ethan Garr
Yeah, for sure I think um, we’ll have to wrap it up because we’re running out of time. But ah, you know I think just one last note is brand and and differentiation and and are something that you and I could probably talk about quite a bit too I mean yeah if you’re not Starbucks going into the same market. You’re probably.
08:54.25 Sean Ellis
09:01.33 Sean Ellis
Yeah, or or just being really big. A lot of a lot of big companies feel like they can launch into a new Market Leverage their channel advantage on their brand but they kind of skip the why is this solution better than anything else. That’s out there and if they do that Then there’s a good chance. They’re gonna.
09:01.36 Ethan Garr
Don’t rely on your brand as your differentiator. But. Yeah.
09:20.61 Sean Ellis
They’re going to fail at with that innovation which happens all the time when big companies try to innovate.
09:21.68 Ethan Garr
For sure all right? Well, that’s all the time we have thanks everyone for tuning into this week’s growth snack. It’s one growth insight to help you power your team’s breakout growth success next week we’re back with a full Breakout Growth Podcast episode. And an interview with a growth leader from another of the world’s fastest-growing companies. So if you’re hungry for growth keep tuning it.